q1 2020 ifrs results - ir.aeroflot.com · 6/2/2020 · • market and aeroflot group performance...
TRANSCRIPT
A E R O F L O T G R O U PQ1 2020 IFRS RESULTS
2 June 2020
Speakers:
Andrey Chikhanchin – Deputy CEO for Commerce and Finance
Andrey Panov – Deputy CEO for Strategy, Service and Marketing
Ivan Batanov – Head of Revenue Management
2
This document has been prepared by PJSC “Aeroflot” (the “Company”). By attending the meeting where the presentation is made, or by reading the
presentation slides, you agree to the following.
This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to
purchase or subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation or distribution form
the basis of, or be relied on in connection with, any contract or investment decision.
No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness.
No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or
agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its
contents.
This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements
regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial
condition, liquidity, prospects, growth, strategies, and the market in which the Company operates. By their nature, forwarding-looking statements involve
risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you
that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and
liquidity and the development of the market in which the Company operates may differ materially from those made in or suggested by the forward-
looking statements contained in this document. The Company does not undertake any obligation to review or confirm expectations or estimates or to
update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.
Disclaimer
3
Aeroflot Group Q1 2020 Highlights
¹ Q1 2020 net loss adjusted for reclassification of part of the reserve for hedging instruments to hedging result in PnL (more info on slide 20).Note: immaterial deviations throughout the presentation are explained by rounding
• In Q1 2020 Aeroflot Group performance was significantly affected by COVID-19 amid pressure
on demand mounting in February and March with respective implications for financials.
• Notwithstanding the external pressure the Group was able to increase yield and maintain
comparable level of adjusted net loss vs. Q1 2019.
PAX Yield Adjusted Net Loss1 External Factors
11.2 mln
- 12.3 %
12.8 mln
+ 0.2 %
(15.7) (15.8)
+ 3.3 %
3.56
3.67
COVID-19
Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020
Million PAX RUB / RPK Billion RUB
4
1. Market Update and Operating Results
2. Network and Schedule Overview
3. Fleet Overview
4. Financial Performance
5. Appendix
5• Market and Aeroflot Group performance remained under pressure in Q1 2020 amid significant adjustment in
demand in the face of COVID-19, which extended into following quarters.
Overview of the Russian Market
Passenger Traffic: Market vs Aeroflot Group
Russian Air Transportation Market (million PAX)incl. PAX of Russian and Foreign Carriers and intl. transit PAX
Aeroflot Group (million PAX)
Key Market Players
Market Shares
68,8 73,1
68,1 74,1
137,0147,2
12M 2018 12M 2019
14,8 14,6
13,3 11,5
28,1 26,1
Q1 2019 Q1 2020
International Routes
Domestic Routes
31,0 33,6
24,727,1
55,760,7
12M 2018 12M 2019
7,0 6,7
5,7 4,5
12,8 11,2
Q1 2019 Q1 2020
6.1%
8.8%
7.5%
(7.1)%
(13.7)%
(1.2)%
8.5%
9.6%
9.0%
(12.3)%
(21.2)%
(5.0)%
11,2
3,6
1,8 1,62,8
5,1
AeroflotGroup
S7 Group Ural Airlines UTair Group ForeignCarriers
Others
-1.6
Change in PAX million
+0.1
+0.01 -0.1-0.5
+0.1
45,4%
12,5%6,3%
6,1%
11,9%
17,8%
42,9%
13,8%6,9%
6,1%
10,9%
19,5%
Foreign Carriers Others
Q1 2019 Q1 2020
Source: TCH, Aeroflot Group. Figures include foreign carriers’ traffic.
6
• Russian market was substantially hit by COVID in March 2019 with increased magnitude of the impact in April.
• Load factor in March started to decline as capacity adjustment lagged swift declines in demand.
Source: TCH, Federal Air Transport Agency, Aeroflot Group calculationsSource: TCH, Federal Air Transport Agency, Aeroflot Group calculations
Material Impact of COVID-2019 Starts from March
8,9
8,0
6,4
0,7
January February March April
6.6% 6.4% (28,1)% (92.1)%
30,5
26,7
23,5
4,0
January February March April
10.0% 8.7% (17.6)% (86.0)%
79%
69%
39%
Monthly PAX Traffic (Russian Carriers) Capacity (Russian Carriers) and PLF
79%
Million PAX Billion ASK, PLF in %
7
• Domestic traffic decline was slower and less dramatic than in international segment proving resilience of domestic
market and opportunities for trend reversal.
PAX Traffic of Russian Airports in March and early April
Domestic Segment Showed Resilience vs. International
April – International Segment
April – Domestic Segment
-87%
-70%
-41 ppto
39%
PAX ASK PLF
-100%
-70%
-40%
-10%
20%
1 4 7 10 13 16 19 22 25 28 31 3 6
Total PAX Domestic International
Source: Russian international airports association (MAA), Federal Air Transport Agency
PAX dynamics based on 33 key Russian airports
March 2020 April 2020
Only 22 thousand PAX
transported
(-99% y-o-y)
International flights suspended
excluding
special repatriation flights
8
Aeroflot Group Multi-Brand Strategy Provides for
Flexibility in Difficult Times
0,3 0,3
61,9%
• Flagship carrier
• Premium product (4 Stars)
• High income and middle class
• Hub and spoke model
• Scheduled network under SU
(Aeroflot) code from
− Moscow (SVO)
− St. Petersburg (LED)
• Charter operations
Premium
8,56,9
6.9
-18.0%
1,91,5
2,02,5
-23.1%
+22.2%
-15.2%
Q1 2019 Q1 2020
13,3%
22,3%
2,5%
1.5
2.5
0.3
• Point-to-point carriage
• Focus on domestic
segment and underserved
international routes
• Airline for communities in the
Russian Far East offering
flights
− between large cities
− to remote cities
• Material decline in demand and closed borders have resulted in Q1 traffic decline for key carriers of the Group,
excluding Pobeda. In April and May the Group has significantly adjusted its capacity in all segments.
Source: Aeroflot Group1 PAX contribution as of Q1 2020. Absolute number of passengers in million in green circle
Q1 2019 Q1 2020
Q1 2019 Q1 2020
Q1 2019 Q1 2020
Brand Business Model Q1 2020 PAX Contribution1 and Dynamics April 2020
Mid-price
Low Cost
Regional
-95% PAX
-89% ASK
-92% PAX
-88% ASK
-100% PAX
-99% ASK
-85% PAX
-74% ASK
9
Pobeda LCC: Timely Value Proposition
April and May operations suspended amid demand decrease
Total Traffic an PLF by Month
62
Krasnodar
Rostov
NazranMakhachkala
Astrakhan
Volgograd
KazanPerm
Chelyabinsk
Ekaterinburg
Surgut
Novosibirsk
Bergamo
Bratislava
Cologne
Memmingen
Girona
Samara
Cheboksary
Larnaca
Tivat
Saint Petersburg14
Nizhnekamsk
Moscow
VladikavkazTbilisi
Krasnoyarsk
Pisa
Base cities with >10 routes served from city
(number of routes in circle)
Baden-Baden
Ulan-Ude →Karlovy VaryLeipzig
Venice
Kaliningrad
Eindhoven
Helsinki
Innsbruck
Kemerovo
Salzburg
Berlin
Rome
Kirov
Min.Vody
Petrozavodsk
Tomsk
XXCities with <10 routes served from city
Cities where the airline operates to
Anapa
AntalyaBodrum
Bari
Cagliari
CataniaDalaman
Gelendzhik SochiGenova
Gazipaşa
Istanbul Gyumri
Omsk
Ostende
Palermo
Riga
Rimini
TyumenUlyanovsk
Varna
Batumi
Magnitogorsk
12
34% 32%
3%
January February March
94.4% 94.4% 84.2%
PL
F
Q1 2020 RPK Mix Adjustment
PA
X,
y-o
-y78% 22%
Domestic International
12 p.p. shift from international to domestic y-o-y
Overview
30
B737NG aircraft with single class cabin (189 seats)
2.5
mm PAX transported in Q1 2020 (+22.2% y-o-y)
91.2%
PLF remained high despite ongoing pressure in March
• Pobeda, the only Russian LCC, has temporarily suspended operations, but is uniquely positioned to bring
back capacity to the market thanks to its value proposition appealing to cost conscious passengers.
Source: Aeroflot Group
10
1. Market Update and Operating Results
2. Network and Schedule Overview
3. Fleet Overview
4. Financial Performance
5. Appendix
11
• Positive pricing trends of 2019 were maintained in the beginning of 2020 allowing for increase in yields in Q1.
• RASK was under pressure due to significant adjustment in PLF in February-March 2020 on the back of COVID-
related demand pressure.
Source: Aeroflot GroupNote: Data presented based on management accounting figures, scheduled flights revenue is used for calculations
RUB RUB
3.2%0.7% 1.1%
Aeroflot Group Scheduled Flights Revenue Units
Q1 Yield (PAX Revenue / RPK) Q1 RASK (PAX Revenue / ASK)
RUB / RPK RUB / ASK
% Y-o-Y increase 2019 2020 % Y-o-Y increase 2019 2020
3,39
3,74
3,60
3,40
3,97
3,72
Domestic International Total
2,66
2,84
2,77
2,42
2,75
2,60
Domestic International Total
0.1%
(9.1)%
6.2%
3.2%
(6.0)%
(3.2)%
12
Aeroflot routes
Rossiya routes
Aurora routes
• Aeroflot Group operated only limited number of flights to the key domestic markets maintaining minimal required
capacity while international flights were performed only for repatriation purposes.
• Starting from June Aeroflot Group intends to gradually restore operating volumes in domestic segment.
Source: Aeroflot Group
Note: 1 Scheduled flights of Aeroflot Group in Q1 2020 vs. Q1 2019 (excluding Pobeda LCC)
Los Angeles
MOSCOW
Malaga
Alicante
Amsterdam
Brussels
Stockholm
AthensAntalya
Barcelona
Belgrade
Bologna
BudapestParis
Copenhagen
DresdenDusseldorf
Rome
Frankfurt
Geneva
Hannover
Hamburg
Helsinki
Heraklion
Istanbul
Larnaca
London
Lyon
Madrid
Munich
MilanNice
Oslo
Bucharest
Prague
Riga
Thessaloniki
SofiaSplit
Stuttgart
Berlin
Tbilisi
Tenerife
Tivat
Tallinn
Venice
Vienna
Valencia
Kaunas
Warsaw
Zagreb
Zurich
Lisbon
Havana
Washington
New York
Miami
Male
Phuket
Ho Chi Minh City
MOSCOW
Anapa
Abakan
Adler
Arkhangelsk
Astrakhan
Barnaul
Chelyabinsk
Belgorod
Magadan
Gelenzhdik
Khanty Mansiysk
Irkutsk
Kemerovo
Kaliningrad
Khabarovsk
Krasnoyarsk
Krasnodar
SamaraKazan
Saint Petersburg
Murmansk
Magnitogorsk
Mineral Waters
NizhnekamskNizhny Novgorod
Nizhnevartovsk
Novokuznetsk
New Urengoy
Novosibirsk
Perm
P. Kamchatsky
Orenburg
Rostov
Saratov
SyktyvkarSurgut
Simferopol
Salekhard
Stavropol
EkaterinburgTyumen
TomskUfa
Yu. Sakhalinsk
Volgograd
Voronezh
Vladivostok
Yakutsk
Aktobe
Almaty
Shymkent
Yerevan
Bishkek
Atyrau
Baku
KaragandaChisinau
KostanayMinsk
Aktau
SamarkandTashkent
Astana
Beirut
Dubai
Teheran
Tel Aviv
Bangkok
HanoiHong Kong
Guangzhou
Delhi Shanghai
Tokyo
Beijing
Seoul
Ulan Bator
Sochi
Frankfurt
Dalian
Harbin
Busan
Antalya
BarcelonaBurgas
Paris
Dusseldorf
Rome
Hamburg
Varna
Larnaca
Munich
MilanNice
Prague
Rimini
Berlin
TivatIstanbul
Vienna
Makhachkala
Orly
Omsk
Minsk
Chisinau
Aeroflot Group Network Adjustments
Scheduled Network in April 2020 (flights per day, average)# of Flights Evolution by Region1
88 flights,
sizable markets
Repatriation
flights
Domestic
International
29 flights,
sizable markets
(7,5)%
(18,0)%
(14,6)%
(2,3)%
(13,5)%
(14,7)%
(2,0)%
Total
Middle East & Africa
CIS
North & Central America
Asia
Europe
Russia
13
• Adjustment of capacity due to decline in demand and load factors was a timely instrument to reduce losses and
variable costs.
• In April Aeroflot Group maintained minimal domestic services in order to ensure connectivity between the regions.
Source: Aeroflot Group
Operating Numbers in Q1 and Q2
ASK
PLF
Total Domestic International+
15,0 13,8 12,1
1,6
2% 4% (20)%(90)%
Jan Feb Mar Apr
ASK, bn %, y-o-y
6,0 5,5 6,01,5
6% 6% 5%(76)%
Jan Feb Mar Apr
ASK, bn %, y-o-y
9,0 8,36,1
0,1
0% 2%(35)%
(99)%
Jan Feb Mar Apr
ASK, bn %, y-o-y
75% 74%63%
35%
(1) p.p. (3) p.p. (18) p.p. (45)
p.p.
Jan Feb Mar Apr
PLF y-o-y change
73% 76%65%
34%
(3) p.p. (2) p.p.(16) p.p.
(47) p.p.
Jan Feb Mar Apr
PLF y-o-y change
76% 73%60%
47%
0 p.p. (4) p.p.(20) p.p.
(34) p.p.
Jan Feb Mar Apr
PLF y-o-y change
14
0
500
1 000
1 500
2 000
2 500
15-Jan 30-Jan 14-Feb 29-Feb 15-Mar 30-Mar 14-Apr 29-Apr 14-May 29-May
2020
2019
• Domestic capacity and passenger traffic in China already bottomed out in mid‐February, followed by a slow pace
of recovery as restrictions are gradually lifted.
Domestic Number of Seats Offered in China and Hong Kong Gradually Increases With the Economic Reopening
Domestic Segment Reopening: China Case
Source: SRS data.
Note: Y-o-y dynamics calculated based on two-week moving average.
Number of seats offered on domestic routes in China and Hong Kong, thousand seats
-70%
-40%-25%
15
Increased Focus on Cargo
• Cargo market has not shrunk as much as passenger transportation has and in order to extract
additional efficiency from fleet utilization the Group deploys some of the aircraft for cargo
transportation.
9,911,2
12,2
6,1
Jan Feb Mar Apr
Tones of cargo and mail
Domestic International Comments
Tones of cargo and mail
~57%
deployed for cargo transportation1
18 WB aircraft
of cargo normally
transported
domestically in April~17%
13,5 14,3
11,5
2,7
Jan Feb Mar Apr
of cargo normally
transported
internationally in April
~33%
of total cargo
normally transported
in April
c30% increase in
cargo capacity
measured vs. normally offered belly
to prepare aircraft for cargo operations
time and cost-
wise efficient
Source: Aeroflot Group.1 As of the end of May 2020.
16
1. Market Update and Operating Results
2. Network and Schedule Overview
3. Fleet Overview
4. Financial Performance
5. Appendix
17• Aeroflot Group continues to intelligently manage capacity additions and develop its fleet taking into account market
trends and opportunities.
Type of
aircraft
Q1 2020 Fleet as at
31.03.2020Delivery Phase out
Wide-body (long-haul) 1 (2) 58
A-330 - (2) 19
A-350 1 - 1
B-777 - - 29
B-747 - - 9
Narrow-body (medium-haul) - (2) 236
A-319 - - 30
A-320 - (2) 80
A-321 - - 33
B-737 - - 93
Narrow-body (regional) 5 - 67
SSJ-100 5 - 54
DHC-8 - - 10
DHC-6 - - 3
TOTAL 6 (4) 361
Fleet Update
Actual and expected additions 2020 Fleet Plans
2020 deliveries as well as
phase-outs are being
discussed with lessors
Part of the fleet is currently
temporary grounded
In Q1 2020 Aeroflot Group
operated 361 aircraft vs 371
aircraft in Q1 2019
18
1. Market Update and Operating Results
2. Network and Schedule Overview
3. Fleet Overview
4. Financial Performance
5. Appendix
19
Financial Highlights: Q1 2020
• Financial results of Q1 2020 are impacted by softening demand due to COVID-19, which was already
reflected in results of February and March.
• Following the ban on international travelling from March 27, 2020 and tightening lockdown and further
restrictions on movement within Russia in April, Q2 2020 financial results are expected to be weak as well.
Million RUB (where applicable) Q1 2019 Q1 2020 Change
Passenger Traffic (mln PAX) 12,764 11,196 (12.3)%
Revenue 138,041 123,894 (10.2)%
PAX Traffic Revenue 119,255 106,608 (10.6)%
Operating Costs 143,940 137,050 (4.8)%
Operating Loss (5,899) (13,156) +2.2x
EBITDA 21,333 13,054 (38.8)%
EBITDA Margin 15.5% 10.5% (5.0) p.p.
Net Loss (15,746) (22,484) 42.8%
Adjusted Net Loss1 (15,746) (15,774) 0.2%
1 Adjusted for reclassification of part of the reserve for hedging instruments in the amount of RUB 6.7 billion to hedging result in the Condensed Consolidated Interim Statement of Profit or Loss for Q1 2020 due to termination of part of US dollar revenue hedging relationship with leasing liabilities.
20
• Pressure from volume and currency factors slightly offset by pricing were the main factors influencing revenue.
• Primary driver of revenue decline was scheduled passenger flights segment showing significant declines in Europe
and Asia.
Revenue Growth Decomposition
Revenue by Key Factors Revenue by Business Segments
Million RUB Million RUB
138 041 (17 057)
(3 376)
10 781 (4,495)123 894
Q1 2019 Volume Currency Pricing Other Q1 2020
138 041 (11 252)
(1 395) 631 (2 131) 123 894
Q1 2019 ScheduledPassenger
Flights
CharterPassenger
Flights
Cargo OtherRevenue
Q1 2020
21
Operating Costs
Operating Expense
(RUB mln if not stated
otherwise)Q1 2019 Q1 2020
Change
y-o-y
Change
ex. FX
% of OpEx
(Q1 2020)
Fuel 43,700 38,604 (11.7)% (11.7)% 28.2%
Opex (ex. Fuel) 100,240 98,446 (1.8)% (2.2)% 71.8%
Aircraft and passenger
servicing28,871 27,444 (4.9)% (5.5)% 20.0%
D&A and customs duties 27,232 26,210 (3.8)% (3.8)% 19.1%
Staff 22,579 21,124 (6.4)% (6.5)% 15.4%
SG&A1 6,669 6,188 (7.2)% (4.7)% 4.5%
Maintenance 6,174 9,225 49.4% 47.4% 6.7%
Communication Expenses 5,065 3,776 (25.4)% (30.0)% 2.8%
Other expenses2 3,650 4,479 22.7% 21.6% 3.3%
Total Opex 143,940 137,050 (4.8)% (5.1)% 100.0%
• In Q1 2020 operating costs were significantly impacted by smaller volume of operations.
1 Includes sales and marketing expenses and administration and general expenses.2 Other expenses include short-term and immaterial lease, reserves accrual and reversal, catering and other income.
Capacity vs. OpEx
Capacity (ASK) : -5%
Total OpEx: -5%
Cost Structure
60%
40%
Variable Fixed
Operating Expenses Breakdown
22
41,4
43,8
30,0
40,0
50,0
45,0
35,0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1(WA)
2020 2019
Fuel Efficiency
• On the back of oil price weakness staring from March 2020 jet fuel prices moved towards “normalized” level
observed in 2015-2017, which is supportive for the industry in the current environment.
(gramme / ASK)Thousand RUB per tonne of jet fuel
1
Source: Aeroflot Group1 Weighted average price for Q1 (2019 and 2020) and 12M (2015-2017).
(0.8)%
Fuel Cost Management
31.1
33.5
2015-2017 FY weighted averages
Average fuel price per tonne
Aeroflot Airline:
• Q1 2020: 41.4 thousand RUB
(-5.5% y-o-y).
• March 2020: 38.7 thousand RUB
(-12.6% y-o-y).
• April 2020: 30.7 thousand RUB
(-30.5% y-o-y).
Aeroflot Airline Jet Fuel Price
22,5 22,1
Q1 2019 Q1 2020
23
Pobeda Financial Results
• Pobeda demonstrated solid results in Q1 2020 notwithstanding softening demand on the back of
COVID-19 spread.
PAX Traffic and Other Operating Metrics
RASK
CASK
Pobeda Statement of Profit and Loss (IFRS, standalone)
Million RUB Q1 2019 Q1 2020 Change
Revenue 8,351 11,114 33.1%
Operating Expenses 9,396 10,450 11.2%
Operating Income (1,045) 664 n/m
Operating margin n/m 6.0% n/m
Adjusted Net Income2 (1,781) 492 n/m
EBITDA 678 2,744 +4.0x
EBITDA margin 8.1% 24.7% 16.6 p.p.
Note: based on managerial accounts transformed under IFRS principles. Includes 12 aircraftsubleased from Aeroflot.1 Calculation based on Total Revenue of the Company2 Adjusted for (excluding) net FX loss from lease liabilities revaluation in the amount of 13.2 bn RUB
in Q1 2020 (3.5 bn RUB net FX gain in Q1 2019) and the associated deferred tax; FX gain/loss eliminated in consolidated financials due to hedging of FX-denominated liabilities with FX-denominated revenues (non-cash income).
2,09 2,26
Q1 2019 Q1 2020
2,02,5
Q1 2019 Q1 2020
2,352,13
Q1 2019 Q1 2020
RASK +8%
PAX +22%
ASK +23%
PLF -1 p.p
CASK -10%
Million PAX, Q1 2020 dynamics y-o-y
RUB / ASK
RUB / ASK
24
Net Debt / EBITDA
Leverage and Liquidity
Million RUB 31-Dec-2019 31-Mar-2020 Change
Borrowings 15,792 46,397 +2.9x
Lease Liabilities 557,124 698,979 25.5%
Pension Liabilities 784 771 (1.7)%
Total Debt 573,700 746,147 30.1%
Cash and Short-Term
Investments25,861 37,375 44.5%
Net Debt 547,839 708,772 29.4%
• Total and Net debt increased on the back of management’s efforts to accumulate liquidity amid significant
pressure on revenue.
• Cash position of RUB 37.4 billion and undrawn credit lines of RUB 80+ billion.
1 Based on financial data under IFRS 16; 31-Mar-2020 exchange rate – 77.73 RUB per USD, 31-Dec-2019 exchange rate – 61.91 RUB per USD.
2 Lease liabilities repayment schedule includes only principal amount and does not include future interest payments and liabilities for heavy maintenance. Does not include restructuring arrangements currently discussed, but not finalized.
Repayment Schedule Before Restructuring2
Debt Profile1
4,2
3,2
4,4
31-Dec-2018 31-Dec-2019 31-Mar-2020
Liquidity
25,9 37,4 49,5
101,0 81,3 62,2
126,9118,7 111,7
31.дек.19 31.мар.20 30.апр.20Cash and cash equivalents Available credit lines
67,5 86,8 89,4 80,0
355,4
2020 2021 2022 2023 2024+
Billion RUB Billion RUB
25
Aeroflot’s Steps to Navigate COVID-19 Crisis
• Management team is taking all necessary steps to minimize the financial consequences of the COVID-19
impact on Group’s operations and cash outflows from the company to optimize cash position.
Decrease number of operations to reduce variable costs
Optimize key fixed cost lines and CAPEX
Negotiations with partners and suppliers
Addressing liquidity risks of unearned revenue from ticket refunds
Restructuring deliveries of the fleet
Focus on domestic market and launching new domestic destinations
Operating passenger aircraft as cargo with increased capacity
~ 10% of capacity (ASK)
operated
Suspension of non-key spending
Special terms with lessors + ongoing
negotiations
Introduction of vouchers
Aircraft deliveries moved to later periods
New domestic routes in Summer 2020 schedule
Positive cargo revenue contribution
Work stream Comments Results
26
Optimizations with Liquidity in Focus
• Minimizing monthly cash burn via optimizing operating expenditures and reducing CAPEX
coupled with roll-out of state support are key to navigating through COVID-environment.
Optimizing monthly cash outflow1 Reducing 2020 CAPEX State support
~10-11
CMD 2019 plan Post managementactions
Billion RUB
~65
Up to 3x decrease
Monthly opex innormal environment
Post managementactions
Billion RUB, Including VAT, monthly average
~8bn state subsidy
Aeroflot is in the list of key
companies of the economy -
eligible for extra help
Other measures including
regulation amendments
resulting in indirect support are
announced1 Cash outflows, including cash costs, interest on lease payments (accounted as interest expense in PL) and indirect taxes (including VAT, etc.). Based on managerial accounts.
Down ~ 2x
27
1. Market Update and Operating Results
2. Network and Schedule Overview
3. Fleet Overview
4. Financial Performance
5. Appendix
28
52,6 56,4
62,6 68,8
73,1
2015 2016 2017 2018 2019
97,9 101,4 102,3 110,0 116,5
2015 2016 2017 2018 2019
Russian Air Transportation Market: Room for Growth
Trips per Capita2
… from airlines on domestic routes
Russian Total Passenger Traffic Growth, mln PAX1
Total CAGR 8.2%
International – 7.9% | Domestic – 8.6%
Source: TCH, Federal Air Transport Agency, Russian Railways (RZD), Aeroflot Group calculations1 Total local and foreign carriers’ traffic2 Airline O&D per capita per year
3,7
2,5
1,10,8
0,50,3
UK USA Turkey Russia2018
China Russia2008
• Russian market is well positioned for long-term growth on the back of low penetration, additional potential from
ongoing structural changes and increasing propensity to travel by air as well as advantageous geographical position.
Railways facing increasing competition…
RZD long-haul rail traffic, million PAX Domestic air traffic, million PAX
(5.0)% 3.6% 0.8% 7.9%5.6%
10.9%
13.6%7.3%
10.0%6.1%
52,6 56,4 62,6 68,8 73,1
54,7 46,461,1
68,1 74,1107,3 102,8
123,7137,0
147,2
0,0
50,0
100,0
150,0
2015 2016 2017 2018 2019
Domestic Routes International Routes
29
Operating Data – Q1 2020
Unit Q1 2019 Q1 2020 Y-o-Y Q1 2019 Q1 2020 Y-o-Y
Passenger Traffic th PAX 8,453 6,930 (18.0%) 12,764 11,196 (12.3%)
International Routes th PAX 4,380 3,438 (21.5%) 5,731 4,514 (21.2%)
Domestic Routes th PAX 4,073 3,493 (14.2%) 7,033 6,682 (5.0%)
Passenger Turnover mn pkm 23,285 19,123 (17.9%) 33,544 29,035 (13.4%)
International Routes mn pkm 15,925 12,671 (20.4%) 20,565 16,581 (19.4%)
Domestic Routes mn pkm 7,360 6,453 (12.3%) 12,978 12,454 (4.0%)
Passenger Capacity mn ASK 30,716 28,684 (6.6%) 43,044 40,859 (5.1%)
International Routes mn ASK 21,063 18,758 (10.9%) 26,547 23,451 (11.7%)
Domestic Routes mn ASK 9,653 9,927 2.8% 16,497 17,407 5.5%
Passenger Load Factor % 75.8% 66.7% (9.1) p.p. 77.9% 71.1% (6.9) p.p.
International Routes % 75.6% 67.5% (8.1) p.p. 77.5% 70.7% (6.8) p.p.
Domestic Routes % 76.2% 65.0% (11.2) p.p. 78.7% 71.5% (7.1) p.p.
Tonne-Kilometres mn tkm 2,302 1,956 (15.0%) 3,288 2,920 (11.2%)
International Routes mn tkm 1,582 1,312 (17.1%) 2,020 1,683 (16.7%)
Domestic Routes mn tkm 720 645 (10.4%) 1,268 1,237 (2.4%)
Revenue Flights flights 70,136 66,852 (4.7%) 102,457 98,454 (3.9%)
International Routes flights 34,191 29,640 (13.3%) 43,226 36,762 (15.0%)
Domestic Routes flights 35,945 37,212 3.5% 59,231 61,692 4.2%
Flight Hours hours 202,127 188,735 (6.6%) 283,525 268,530 (5.3%)
Aeroflot Airline Aeroflot GroupIndicators
30
Operating Data of Subsidiary Airlines – Q1 2020
Q1 2020 Y-o-Y Q1 2020 Y-o-Y Q1 2020 Y-o-Y
Passenger Traffic th PAX 1,491 (23.1%) 2,493 22.2% 281 (15.2%)
International Routes th PAX 560 (17.4%) 447 (22.8%) 69 (25.1%)
Domestic Routes th PAX 931 (26.2%) 2,045 40.1% 212 (11.4%)
Passenger Turnover mn pkm 5,040 (17.3%) 4,483 21.2% 389 (16.4%)
International Routes mn pkm 2,808 (14.0%) 998 (19.9%) 104 (19.7%)
Domestic Routes mn pkm 2,232 (21.1%) 3,485 42.1% 285 (15.2%)
Passenger Capacity mn ASK 6,539 (14.1%) 4,917 22.9% 718 0.7%
International Routes mn ASK 3,355 (13.7%) 1,141 (18.0%) 197 (3.5%)
Domestic Routes mn ASK 3,184 (14.6%) 3,776 44.7% 521 2.4%
Passenger Load Factor % 77.1% (2.9) p.p. 91.2% (1.3) p.p. 54.1% (11.1) p.p.
International Routes % 83.7% (0.2) p.p. 87.5% (2.2) p.p. 52.8% (10.6) p.p.
Domestic Routes % 70.1% (5.8) p.p. 92.3% (1.7) p.p. 54.6% (11.3) p.p.
Flight Hours hours 35,073 (18.1%) 34,975 22.2% 9,647 (3.5%)
Indicators Pobeda AuroraRossiya
31
Aeroflot Domestic and International Transit
… Results into a Flexible Approach to Transit Flows
Increase in International – International Traffic2
Growing Connectivity of Aeroflot Airline’s Flights1 ...
Source: Aeroflot Group.1 Data for Aeroflot airline’s own flights.2 From 2018 total international-international transit figures include Rossiya airline passenger traffic of the segment.
• Transit traffic segment experienced significant pressure from COVID-related decrease in demand in Q1 2020.
… Backed by expansion of international network …
4,44,8
5,3
0,03
0,2
4,44,8
5,5
2017 2018 2019Aeroflot Rossiya
1,2 0,9
0,10,1
1,31,0
Q1 2019 Q1 2020
Total int. – int. transit traffic, million PAX (Aeroflot and Rossiya flights)
(22.1)%
6 from winter ‘18/19 2 from summer ‘19
BukharaUzbekistan
DenpasarIndonesia
DublinIreland
LjubljanaSlovenia
OshKyrgyzstan
ColomboSri Lanka
MarseilleFrance
PalmaSpain
Share of international-international transit in total traffic of Aeroflot Group2
8.8% 8.7% 9.0% 10.2% 9.1%
13,1 13,9 14,1
24,225,5 25,3
17,018,0 18,2
21,2x 22,0x 23,6x
2017 2018 2019
International Domestic Combined Connectivity ratio
13,612,1
25,225,9
17,8 17,2
24,1x 24,2x
Q1 2019 Q1 2020
4.3 mln
62.2%
0.9 mln13.5%
0.9 mln
13.2%
0.8 mln11.0%
Point-to-pointInternational - InternationalInternational - Domestic / Domestic - InternationalDomestic - Domestic
32
• Group operations in all regions of the world experienced significant pressure from COVID-related
decline in demand.
Source: Data presented based on management accounting for scheduled flights of Aeroflot Group (excluding charter flights)
Q1 2020 Operating Data by Region (Scheduled Routes)
Americas Russia CIS
Europe Middle East Asia
(8,6)% (9,3)%
6,9 %
(13.0) p.p.Passengers
carriedRPK ASK PLF
(4,9)% (4,0)%
5,7 %
(7.2) p.p.Passengers
carriedRPK ASK PLF
(32,8)% (29,7)%(23,0)%
(6.6) p.p.
Passengerscarried
RPK ASK PLF
(19,3)% (19,5)%(13,4)%
(4.9) p.p.
Passengerscarried
RPK ASK PLF (28,1)% (29,5)%
(17,1)%(11.3) p.p.
Passengerscarried
RPK ASK PLF
(14,9)% (15,1)%
(7,3)% (6.7) p.p.
Passengerscarried
RPK ASK PLF
33
• Well-balanced fleet structure in line with Group’s strategy
Aircraft TypeOperated by Total as of Total as of Change vs.
Aeroflot Subsidiaries 31-Mar-20 31-Dec-19 31-Dec-19
Wide-body 39 19 58 59 (1)
Airbus A330 19 - 19 21 (2)
Airbus A350 1 - 1 - 1
Boeing 777 19 10 29 29 -
Boeing 747 - 9 9 9 -
Narrow-body (medium-haul) 154 82 236 238 (2)
Airbus A319- 30 30 30 -
Airbus A32074 6 80 82 (2)
Airbus A32133 - 33 33 -
Boeing 73747 46 93 93 -
Narrow-body (regional) 54 13 67 62 5
DHC 8 - 10 10 10 -
DHC 6 - 3 3 3 -
SSJ 10054 - 54 49 5
Total fleet 247 114 361 359 2
Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Overview Breakdown by Aircraft
Breakdown by Company
Narrow-body (medium-
haul)65%
Narrow-body
(regional) 19%
Wide-body16%
Aeroflot69%
Rossiya17%
Aurora6%
Pobeda8%
34• Aeroflot operates one of the youngest fleets in the industry among airlines with active fleet of 100+ aircraft.
• Aeroflot achieved significant progress in fleet renewal both for Aeroflot airline and for the Group.
1 Average Fleet Age of Selected Airlines with Fleet of 100+ Aircraft according to FlightGlobal data (as of May 2020, data by legal entity)
Aeroflot Group Fleet Evolution
Aeroflot Group Fleet in Operation
Aeroflot Airline Fleet in Operation
Average Age of the Fleet 1
247289
325366 359 361
6,4 6,5 6,2 6,26,9 7.0
2015 2016 2017 2018 2019 31.03.2020
Aircraft Average Age
165189
224253 245 247
4,4 4,2 4,1 4,2
5,0 5.0
2015 2016 2017 2018 2019 31.03.2020
Aircraft Average Age
3.6
4,2
5,0
5,8
5,9
5,9
6,1
6,1
6,2
6,4
6,4
6,4
6,7
6,8
6,9
6,9
6,9
7,0
7,1
7,1
7,2
Malta Air
Frontier Airlines
IndiGo
Hainan Airlines
Wizz Air
Qatar Airways
Spirit Airlines
Vietnam Airlines
Ethiopian Airlines
Sichuan Airlines
Azul
Shandong Airlines
Etihad Airways
Singapore Airlines
Tianjin Airlines
Xiamen Airlines
Shanghai Airlines
China Eastern Airlines
Emirates
Vueling Airlines
35
Traffic Revenue Analysis – Q1 2020
Region Q1 2019 Q1 2020 Y-o-YQ1 2020
% of sch. revenue
Russia 43,133 41,438 (3.9)% 40.6%
Europe 29,479 25,208 (14.5)% 24.7%
Asia 23,605 20,287 (14.1)% 19.9%
CIS 5,561 4,259 (23.4)% 4.2%
North and Central America 5,331 5,083 (4.7)% 5.0%
Middle East and Africa 6,283 5,864 (6.7)% 5.7%
Total 113,392 102,139 (9.9)% 100.0%
1 Data presented based on management accounting2 Data presented based on management accounting for Aeroflot airline and routes of subsidiary airlines under commercial management of Aeroflot
• In Q1 2020 revenue from scheduled passengers decreased by 9.9% on the back of softer demand in all regions of
operations due to COVID-19.
Segment Q1 2019 Q1 2020 Y-o-YQ1 2020
% of revenue
Domestic 44,347 42,489 (4.2)% 39.9%
International 74,909 64,118 (14.4)% 60.1%
Total 119,256 106,608 (10.6)% 100.0%
Traffic Revenue Breakdown by Type
Scheduled Traffic Revenue by POS2
Revenue from Scheduled Passengers (RUB mln)1
Total Passenger Revenue (Scheduled + Charter, RUB mln)
Sheduled Passenger Flights 91,7%
Charter Passenger Flights 4,0%
Cargo 4,3%
Sales abroad24,0%
Online37,8%
Call center and own branches
3,9%
Sales in Russia34,3%
36
2,69
2,822,77
2,44
2,73
2,61
Domestic International Total
3,42
3,643,56
3,41
3,87
3,67
Domestic International Total
Source: Aeroflot GroupNote: Data presented based on management accounting figures, scheduled and charted passenger flights revenue is used for calculations
RUB RUB
3.2%0.7% 1.1%Q1 Yield (Scheduled + Charter PAX Revenue / RPK) Q1 RASK (Scheduled + Charter PAX Revenue / RPK)
RUB / RPK RUB / ASK
• Positive pricing trends of 2019 were maintained in the beginning of 2020 allowing for increase in yields in Q1.
• RASK was under pressure due to significant adjustment in PLF in February-March 2020 on the back of COVID-
related demand pressure.
% Y-o-Y increase 2019 2020
Aeroflot Group Blended Flights Revenue Units
% Y-o-Y increase 2019 2020
(0.2)%
(9.2)%
6.2%
3.3%(5.8)%
(3.1)%
37
3,34
(0,07) 0,00 0,01 (0,01) (0,00)0,08 (0,03) 0,02
3,35
(0,01)
3,34 3,34
CASK Q1 2019 Aircraft and PassengerServicing
Staff Maintenance Other Expenses FX CASK Q1 2019
Group Unit Costs
• Cost per ASK increased only by 0.3% from RUB 3.34 in Q1 2019 to RUB 3.35 in Q1 2020 on the back of active
decrease in both operating expenses and capacity amid lower volume of operations.
-(0.3)%0.3%
Capacity: ASK adjustmentUnit Costs Dynamics
Operating Expense per ASK (CASK), RUB Q1 2019 Q1 2020 Change
Fuel 1.02 0.94 (6.9)%
CASK (ex. Fuel): 2.33 2.41 3.5%
Aircraft and Passenger Servicing 0.67 0.67 0.1%
D&A and Customs Duties 0.63 0.64 1.4%
Staff 0.52 0.52 (1.4)%
SG&A 0.15 0.15 (2.2)%
Maintenance 0.14 0.23 57.4%
Communication expenses 0.12 0.09 (21.5)%
Other Expenses 0.08 0.11 29.3%
Total CASK 3.34 3.35 0.3%
CASK Bridge
43,0
40,9
Q1 2019 Q1 2020
(5.1)%
Billion ASK
RUB / ASK
38
21 333
(17 057)
10 781 (4 496)
(3 376)
(404)
5 094
1 471
1 585
1 521 (2 924)
314 (789)
13 054
EBITDA Q12019
Volume Pricing Other FX drag onrevenue
FX drag oncosts
Fuel* Staff* Aircraft andPAX*
Comm.Expenses*
Maintenance* Admin & Sales& Marketing*
Other OPEX* EBITDA Q12020
EBITDA Evolution
* Excluding currency impact
• Key driver of EBITDA adjustment was a decrease in size and scale of operations on the back of COVID-related
pressure on demand as well as negative FX influence.
Total effect on revenue
∑=(14,147) RUB mlnTotal effect on costs
∑=5,868 RUB mln
Net volume and price effect
∑=(10,771) RUB mln
Net FX effect
∑=(3,779) RUB mln
Net volume and price effect
∑=6,272 RUB mln
39
Operating and Free Cash Flows
• Operating and Free Cash Flow remained under pressure in Q1 2020 due to demand pressure and adjustment of
operating program.
33 158
(31 070)
26 022
11 126 (736)
6 533
11 875
1 943
13 818
(7 016)
3 935 (1 286) 746
10 197
Loss BeforeIncome Tax
D&A InterestExpense
UnrealizedNet FXGain
Other Adj.Before
WorkingCapital
Changes
Cash FlowsFrom
OperatingActivitiesBefore
WorkingCapital
Changes
WorkingCapital
Changesand Income
Tax
Net CashFlows FromOperatingActivities
Purchase ofPPE &
CapitalizedExpenses
DepositPlacementand Return
Net Pre-delivery
Paymentsfor Aircraft
Net LeaseDeposits for
a/c andOther
Free CashFlow Q1
2020
Free CashFlow Q1
2019
40
31-Dec-2019 31-Mar-2020 %
Flight crew 4,359 4,676 7.3 %
Cabin crew 12,494 12,756 2.1 %
Other airline personnel (incl. airlines’ head office) 19,190 16,642 (13.3)%
Other non-airline subsidiaries’ personnel 5,586 7,183 28.6 %
Total1 41,629 41,257 (0.9)%
• Aeroflot Group headcount decrease by 0.9% vs. December 31, 2019.
4.3%
Million RUB per employee, annualized to 31.03.2020 Passengers per employee, annualized to 31.03.2020
5.9%
1 Aeroflot Aviation School headcount is included in Other non-airline subsidiaries’ personnel
Headcount Overview
Aeroflot Group Headcount
Traffic Revenue / Average Airlines’ Headcount PAX Traffic / Average Airlines’ Headcount
Headcount by Category
1 6171 687
31.03.2019 (LTM) 31.03.2020 (LTM)
Flight crew11,3%
Cabin crew30,9%
Other airline personnel
40,3%
Other non-airline personnel
17,4%
16,2
17,2
31.03.2019 (LTM) 31.03.2020 (LTM)
Personnel and Remuneration
Committee
(5 members)
Audit Committee
(3 members)
Strategy Committee
(10 members)
NameAudit
Committee
Personnel and
Remuneration
Committee
Strategy
Committee
Evgeny Ditrich Chairman
Mikhail
PoluboyarinovDeputy Chairman
Vitaly Saveliev
Alexander Galushka Member Member
Igor Kamenskoy Member Member Chairman
Maksim Liksutov
Dmitry Peskov Member Member
Vasily Sidorov Chairman Member Member
Yuri Slyusar Member
Maxim Sokolov Member Chairman Member
Sergey Chemezov
Independent director according to the Russian Corporate Governance Code 41
Board of Directors
Corporate Governance Board of Directors
Executive Board
General Meeting of Shareholders
Board of Directors
Incorporated in Russia, PJSC Aeroflot is subject to
Russian corporate governance regulations and
follows Russian Corporate Governance Code
The Board of Directors is currently composed
of 11 members. The Board’s composition is well
balanced from members’ background perspective.
PJSC Aeroflot
JSC Rossiya Airlines 75%-1 sh.
LLC Pobeda Airlines 100%
JSC Aurora Airlines 51%
JSC Aeromar
On-board sales/catering51%
LLC Aeroflot-Finance
Financial services100%
JSC Sherotel
Hotel services100%
Aeroflot Aviation School
Education services100%
Note: The Group structure as at 31 March 2020; Aeroflot Group consolidates all entities: PJSC Aeroflot and all subsidiaries.
PJSC Aeroflot also owns 45.0% of JSC AeroMASh-AB (Aviation security), 2.43% of JSC Sheremetyevo International Airport (base airport), 3.85% of PJSC Transport Clearing House (mutual settlements between agencies and airlines).
• Over the past years the Group structure was refined with a focus on aviation assets and disposal of non-core
assets, which is in compliance with the Group's strategy to streamline the core business.
LLC A-Technics
Maintenance 100%
42
Aeroflot Group Structure
Airlines Ancillary Companies
Address: 119019, Russia, Moscow, Arbat St. 1
E-mail: [email protected]
Website: www.aeroflot.ru
Investor Relations Contacts